In 2017, Sellable Australia secured $5.5 million in funding to launch an innovative property sales model in Australia. According to the Australian Financial Review, LJ Hooker Corporation and Songpan Investments, which is owned by the White family, both invested in the company, taking 14% and 15% stakes respectively, and giving Sellable a market valuation of approximately $19 million. Sellable aims to disrupt the traditional real estate sales process in Australia, and its board includes Ray White director Dan White and LJ Hooker chief executive Janusz Hooker. The company’s founder and CEO, Justus Hammer, previously co-founded group buying site Spreets, which sold to Yahoo!7 for $40 million in 2011.
Sellable’s unique offering allows property owners to request an all-cash purchase offer for their property through the company’s website. Within 24 hours, Sellable will provide the owner with an offer to purchase their property, and if the owner accepts, they can choose a settlement date and receive the cash payment at that time. Sellable then takes the property, performs minor renovations, and places it back on the market using a Ray White or LJ Hooker agent. After deducting property renovation costs, Sellable provides the original property owner with 75% of the profit from the sale of the property above what Sellable purchased it for, while keeping 25% for itself.
The value proposition of Sellable is based on providing property owners with a guaranteed upfront price for the sale of their property, offering them convenience, speed, and certainty during the property sales process. This iBuying and instant offer model has gained traction in the US since 2014, and Sellable is the first company to explore this model in Australia. The fact that Australia’s two largest real estate network groups have invested in the platform is an interesting development, as the approach to selling a home and removing uncertainty is likely to appeal to some homeowners.
However, one of the key risks with this model is that Sellable is acquiring properties hoping to sell them for more at a later date. If their property valuation is incorrect and they purchase a property at a higher value than the market, they may not be able to sell the property and could end up losing money. The company’s success largely depends on market conditions, and whether they can sell properties quickly enough to avoid losses. The iBuying model is also capital and labour-intensive, which means that Sellable may only be offering the service in Sydney.
Additionally, the company must find a way to get around Stamp Duty if they are buying and selling a property within months. The model may not work if they cannot resolve this issue. Nonetheless, Sellable’s innovative model is worth monitoring, and its success in gaining traction across Australia will be interesting to watch.
